In the options market, someone's betting that Infosys Ltd. will fall as much as 7 percent from the current levels by February 2019 after it announces its results for the third quarter ending December.
Bloomberg's Block Trade Monitor shows a notional amount aggregating more than $29 million was wagered in two trades in India's second-largest software services provider.
The first one on buying a February put option—a right to sell at an agreed price—on Infosys at Rs 620 apiece or 7 percent below the Dec. 20 close. And the other one selling a January call option—right to buy at a pre-decided price—at Rs 750 or 7 percent above the last close.
While it's not possible to identify the trader, such bets are executed to hedge against a decline and it seems that the trader(s) financed this protection by selling the higher strike calls.
That comes as shares of software services exporters have fallen more than the benchmark Nifty 50 in the last 12 weeks as the rupee strengthened. Since Oct. 1, Infosys witnessed a short build-up with open interest rising more than 80 percent as the price fell 12 percent.
The key resistance level is Rs 670, according to Bloomberg's proprietary option stability band. Pressure will remain on it as long as the stock trades below that level.
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